Using Kiva to manufacture spend

Old Nov 16, 12, 6:35 pm
  #1  
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Using Kiva to manufacture spend

I've been aware that FTers are using Kiva to manufacture spend or generate points. I have nothing against Kiva personally, nor have I done my due diligence about this company.

However, I would warn all FTers that there is a risk in doing these kind of Kiva spends. Even if some of you have done your due diligence, and find that the company backing Kiva is financially sound and a legitimate operation there is always a possibility that Kiva can close down overnight. I strongly doubt that Kiva or its parent company has any credit rating, so Kiva loans are going to be akin to junk bonds. If a default happens for whatever reason, I would expect that all outstanding "loans" will be something that FTers will not get back, not without a costly and long drawn out litigation... assuming that Kiva is based in the US.

So, while I know many kind folks think that Kiva spends is a win-win scenario for all, I would exercise restraint. If you are churning $10k through Kiva, make sure you can cough up that $10k to pay your CC bills if the need arises.
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Old Nov 16, 12, 6:41 pm
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Very sound advice.

Originally Posted by Rommie2k6 View Post
I've been aware that FTers are using Kiva to manufacture spend or generate points. I have nothing against Kiva personally, nor have I done my due diligence about this company.

However, I would warn all FTers that there is a risk in doing these kind of Kiva spends. Even if some of you have done your due diligence, and find that the company backing Kiva is financially sound and a legitimate operation there is always a possibility that Kiva can close down overnight. I strongly doubt that Kiva or its parent company has any credit rating, so Kiva loans are going to be akin to junk bonds. If a default happens for whatever reason, I would expect that all outstanding "loans" will be something that FTers will not get back, not without a costly and long drawn out litigation... assuming that Kiva is based in the US.

So, while I know many kind folks think that Kiva spends is a win-win scenario for all, I would exercise restraint. If you are churning $10k through Kiva, make sure you can cough up that $10k to pay your CC bills if the need arises.
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Old Nov 16, 12, 6:44 pm
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There is always MicroPlace as well....
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Old Nov 16, 12, 9:05 pm
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All true I guess, but its not really Kiva we should worry about. They've been around, facilitating loans, for a long time. It's their partners around the world that deserve scrutiny. Kiva is kind enough to provide delinquency rates and default rates for each loan servicer, so it's easy to make the right choice.

For myself, I use Kiva to provide micro loans to third world entrepreneurs, not to generate spend.
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Old Nov 16, 12, 9:53 pm
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Originally Posted by AlohaDaveKennedy View Post
Very sound advice.
There's risk in almost anything involved in this game. If something was very little risk, it would get outed so fast and then heavily blogged and then shut down almost as fast. This is not a game for people who are risk averse. Like djrez4 I will be using Kiva to micro-lend, any miles earned are truly gravy.
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Old Nov 17, 12, 4:59 am
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Originally Posted by TheBOSman View Post
There's risk in almost anything involved in this game. If something was very little risk, it would get outed so fast and then heavily blogged and then shut down almost as fast. This is not a game for people who are risk averse. Like djrez4 I will be using Kiva to micro-lend, any miles earned are truly gravy.
I agree. Kiva is wonderful enough as it is. Getting some extra miles/points/cash back is just gravy. ^
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Old Nov 17, 12, 6:04 am
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Frequent miler had a post yesterday about putting many thousands per month into kiva and doing frequent withdrawals. In the comments, a very similarly worded caution to the OPs was posted. I read the warning of the OP and that of the commenter on FM as with concern about Kiva's own stability as an organization rather than regarding the risk on individual loans. In both posts, no specific cause for the concern was noted.

I agree that putting more money into any single organization or plan than one could afford to lose is a bad idea. That is just simple prudence and common sense.That said, I have to wonder if there is a reason for these warnings here and on Frequent Miler? Is there any cause for concern re the underlying organization at Kiva? I certainly am not aware of any, and both posters say they have not done due diligence and uncovered any.
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Old Nov 17, 12, 6:21 am
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Perhaps I should add that I do make Kiva loans as well, and like onthego15 and others who posted above, I believe in the work that kiva is doing and find the miles to be gravy. I also am not participating anywhere near the Frequent Miler level.

So what concerns me re the OP's post is that, though the OP says that he or she has not done due diligence on Kiva itself, this warning could discourage participation by new lenders and perhaps for no good reason. I do agree with the OPs general statement that no one should put more money into kiva loans than they can afford to lose, but that, again, is just common sense.
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Old Nov 17, 12, 7:28 am
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I've been lending with Kiva for 2 1/2 years. My own default rate is 0.4% Kiva's default rate since its inception is 1.00% I think that is exceptional, especially when you consider that Kiva is all about lending to people all over the world who have little access to credit.
I see no reason at all to worry about Kiva's stability.

However, there is a risk in getting into Kiva lending just to cycle money through and maximize miles/points/cash back. Some folks who do this a lot (withdrawing all or virtually all of their money each month) now have to wait weeks for their withdrawals to be mailed to them. Kiva does this rarely, but it has happened.

As far as I know, making occasional withdrawals is not a problem.
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Old Nov 17, 12, 7:38 am
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Originally Posted by Rommie2k6 View Post
I've been aware that FTers are using Kiva to manufacture spend or generate points. I have nothing against Kiva personally, nor have I done my due diligence about this company.

However, I would warn all FTers that there is a risk in doing these kind of Kiva spends. Even if some of you have done your due diligence, and find that the company backing Kiva is financially sound and a legitimate operation there is always a possibility that Kiva can close down overnight. I strongly doubt that Kiva or its parent company has any credit rating, so Kiva loans are going to be akin to junk bonds. If a default happens for whatever reason, I would expect that all outstanding "loans" will be something that FTers will not get back, not without a costly and long drawn out litigation... assuming that Kiva is based in the US.

So, while I know many kind folks think that Kiva spends is a win-win scenario for all, I would exercise restraint. If you are churning $10k through Kiva, make sure you can cough up that $10k to pay your CC bills if the need arises.
There is risk in making a loan to any person or entity. That should be self-evident. Default rates are at least disclosed as well as the fact you may not receive repayment of some/all of the funds. If blogs are pushing this as an easy way to meet spend without risk or out of pocket cost, they should be corrected on that specifically. However if you don't have any specific information, not already disclosed about Kiva and its partners, and haven't done due diligence....then I'm unclear why you're posting this broad statement in MilesBuzz.

Originally Posted by TheBOSman View Post
There's risk in almost anything involved in this game. If something was very little risk, it would get outed so fast and then heavily blogged and then shut down almost as fast. This is not a game for people who are risk averse. Like djrez4 I will be using Kiva to micro-lend, any miles earned are truly gravy.
Agree, I consider it basically a charitable contribution (not in a tax sense of course, just a personal point of view). If I get most of my money back and earn a few miles, too, then so much the better.
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Old Nov 17, 12, 8:20 am
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Originally Posted by AlohaDaveKennedy View Post
Very sound advice.
+1. I find Kiva loans scary. I can only begin to imagine the fraud that goes on with these and the amount of money being used to finance criminal activities. Not to mention the inevitable losses that people will incur.
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Old Nov 17, 12, 8:25 am
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Originally Posted by ma91pmh View Post
+1. I find Kiva loans scary. I can only begin to imagine the fraud that goes on with these and the amount of money being used to finance criminal activities. Not to mention the inevitable losses that people will incur.
I hardly think that these loans are large enough to finance criminal activity. The repayment rate is very good if you do your due diligence, and you help turn people's lives around....what's bad. BTW, my repayments after five months are 40 percent, so things are going just fine.
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Old Nov 17, 12, 8:30 am
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Originally Posted by larrythai View Post
I hardly think that these loans are large enough to finance criminal activity. The repayment rate is very good if you do your due diligence, and you help turn people's lives around....what's bad. BTW, my repayments after five months are 40 percent, so things are going just fine.
I commend the positive aim. I really don't see how you can do any real due diligence though. In deal terms, the seller is always providing you with due diligence materials. That is a recipe for abuse. Easy enough for a small time drug runner to post some pictures of some lady in the village making mats claiming she needs the money to feed her starving children.

I don't mean to p*** too much on anybody's fire, but I have looked at Kiva a few times and concluded it's not for me. There are other ways for me to make my contributions to society that I fundamentally feel more comfortable with.
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Old Nov 17, 12, 8:33 am
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Originally Posted by ma91pmh View Post
+1. I find Kiva loans scary. I can only begin to imagine the fraud that goes on with these and the amount of money being used to finance criminal activities. Not to mention the inevitable losses that people will incur.
Totally untrue. Kiva has been in business for 7+ years with a 99% repayment rate. Those are facts, not speculation.
I also suspect that your suspicions of fraud and criminal activity are baseless.
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Old Nov 17, 12, 8:35 am
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Originally Posted by ma91pmh View Post
I commend the positive aim. I really don't see how you can do any real due diligence though. In deal terms, the seller is always providing you with due diligence materials. That is a recipe for abuse. Easy enough for a small time drug runner to post some pictures of some lady in the village making mats claiming she needs the money to feed her starving children.

I don't mean to p*** too much on anybody's fire, but I have looked at Kiva a few times and concluded it's not for me. There are other ways for me to make my contributions to society that I fundamentally feel more comfortable with.
Concluding that Kiva is not for you is fine. I totally understand that it's not for everyone. Making accusations without any facts to back them up is not fine. I have studied Kiva is great depth, and I am deeply impressed with their due diligence.
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